Gasoline, natural-gas futures hit eleven-week lows

Crude for September delivery lost 15 cents, or 0.2%, to $75.25 a barrel, the lowest for a most-active contract since mid-July.

A weaker dollar and higher equities provided some support, and oil at times traded in positive territory. But, unlike other markets going through corrections and sell-offs, "we're just not seeing people coming around and buying," said Matt Smith, an analyst at Summit Energy in Louisville, Ky.

Investors looked to Tuesday's industrial production numbers and a trade group's estimates on inventories to provide some direction.

Gasoline futures closed at an eleven-week low, with the September contract settling down 2 cents, or 0.8%, to $1.92 a gallon. That's gasoline lowest price since May 25.

That it has hit a fresh 11-week low doesn't bode well for gasoline's prospects. "The summer is winding down and we still have plenty of inventories," said Tom Bentz, commodities analyst with BNP Paribas in New York.

Natural gas also saw red Monday -- to the tune of a 2.3% pullback and an 11-week low.

The September contract shed 10 cents to $4.23 per million British thermal units. The fuel's "chief demand stimulant, hot weather, is fading in the outlook," analysts at Barclays said in a note to clients.

As cooler temperatures are expected for parts of the U.S., "the bullish influence of the weather has fallen off," Summit Energy's Smith said. "People just don't have a reason for buying today."

Oil futures opened marginally stronger Monday, and they resisted a drop lower even as the Federal Reserve Bank of New York reported a lower-than-expected rise for its Empire State manufacturing index.

Manufacturing activity in the New York region rebounded a bit, climbing to 7.1 in August from 5.1 in July. Stock futures trimmed losses on the news, but the major benchmarks opened lower. Read more about stocks here.

Investors also had to grapple with news that the economy in Japan grew at a much slower pace than expected. The country's gross domestic product rose 0.4% in the second quarter, whereas economists had expected a rise around 2.3%.

Japan ranks as the world's third largest oil consumer, analysts at Commerzbank said in a report to clients.

Also Monday, a gauge of housing activity left investors disappointed. The National Association of Home Builders/Wells Fargo Housing Market Index fell to 13, its worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15. Read more about the home-builders index here.

Less speculative buying

Meanwhile, optimism about oil prices among speculative financial investors is fading, Commerzbank said. Speculative net long positions decreased in the week ended Aug. 10, the first reduction in five weeks, the analysts said.

Large oil investors liquidated more of their long positions, or bets oil prices will go higher, than shorts on the week, a government report showed Friday.

The drop in prices after the data were compiled suggest "a reduction in speculated positions has continued since then," the Commerzbank analysts said. "Without the support of financial investors, the price of oil is likely to approach the $70 mark rather quickly."

Overall market bearishness and bad news on the macroeconomic front caused oil to decline nearly 7% last week. Traders have grown concerned about the slowdown in the pace of the recovery, which would serve to crimp demand for oil and other energy products.

Meanwhile, analysts polled by Platts expect crude-oil inventories to decline by 2.25 million barrels. The American Petroleum Institute reports its stockpiles data on Tuesday, while the more closely watched government data is expected Wednesday.

The analysts surveyed by Platts also forecast a decline of 1.6 million barrels for gasoline stockpiles and an increase of 1.4 million barrels for inventories of distillates.

Inventories are still historically higher, however. That combined with "the still-fragile sentiment in the market" has led Goldman Sachs to recently cut its near-term price forecast to the lower end of $85-$95 a barrel for the second half of the year.

"However, we expect the supply-demand balance to continue to tighten in (the second half of 2010) as continued global economic growth - albeit likely at a slower pace in (the second half) - continues to strengthen demand, which will return inventories back down to more normal levels towards the end of the year," analysts at the investment bank said in a report made public Monday. "We believe that current price levels remain significantly below levels warranted by fundamentals."

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.